For many executives, the idea of working with Private Equity is something they envision “down the road.” Many believe they have far too many more important things to do in their corporate career to be distracted by the shiny object that is PE. And maybe in some cases those opinions are valid; but in my experience, you’re better off investing in PE relationships when you’re at the top of your game, versus when it’s time to be put out to pasture.
PE investors are no less ambitious about their careers than you are. And for them, the best management talent is essential to their success… right now! If you’re a talented exec in a public company you may be working for a controlling CEO (who likely is also the Board’s Chairman) and a Board of Directors that is handpicked to back up the CEO’s choices without much interference. Ask yourself if that condition always fosters best practices in management and strategy. Does it create an environment of corporate politics? Does it really empower the business to optimize and achieve all it is capable of? In many cases the answers are obvious.
The case for jumping into PE:
- Returns that beat the typical markets.
- Relentless pursuit of operational efficiency.
- Fewer regulatory hoops.
- Concentrated vision at the top.
- Culture set by the leader – You!
If you decide to be more proactive in getting noticed by the right Private Equity firms, you should consider spending a little time with them as they conduct due diligence on a target company. This is a great way to get to see them in action and examine how they make decisions: all under the pressure of a live deal.
- Map out the relevant firms. Pay attention to the firms that are active in your space(s). Some of the name brand firms are easy to track because of the deals they chase and the attention it garners in the press. You can also take your Corp Dev/M&A guy to lunch and talk about who he knows in the sector. That could be a very efficient shortcut.
- How to approach. Many PE firms have a Human Capital Partner sitting inside their organization who simply serves as the firm’s conduit to outside talent. Don’t be shy in reaching out to them to get on the firm’s radar screen. It’s in their best interest to know you. You can also get in through someone like me. Unashamedly, I’ve got tons of incentive to broker great connections.
- Avoid conflicts of interest. This goes without saying, and the PE firms expect it as a gating item. It’s OK to say No if circumstances demand… and it may whet their appetite even further.
- Upside for getting involved. First and foremost, it’s your space where you’re the expert so it’s a chance for you to shine. Also, it’s a low risk time investment. The amount of your effort is self-directed. And if the deal happens, maybe it materializes into a Board seat for you with some equity or a co-invest opportunity. Nothing wrong with that. How many times do execs call me asking about how they can get on some Boards of Directors? Keep this due diligence tactic in the back of your mind for when Board roles make sense for you.
- People Make the Difference. In PE, capital is becoming more of a commodity. Debt is cheap. The real difference maker is relationships, and relationships are people. This is the last, best lever that a firm can utilize to win and it’s not going to be supplanted by AI or machine learning anytime soon.
As a Partner at Lancor, Chris' practice is principally dedicated to serving private equity firms in North America and Europe. For the last ten years, he has focused on operating partner and other fund administration roles, and on C-suite roles for those firms’ portfolio companies, located around the world. He leads Lancor's Private Equity Practice and coordinates the firm’s coverage model in serving its clientele. He has spoken at various conferences on the role of the operating partner and, in 2008, BusinessWeek magazine recognized Chris as one of the “Top 100 World’s Most Influential Headhunters.”